Growth by Design: How Good Design Drives Value

• Author: Maneesh Mehta
• Pages: 883-962

883

Chapter 31

Growth by Design:

How Good Design Drives Value*

maneesh mehta

A. INTRODUCT ION

In t oday ’s glob al ma rket plac e, the mess age i s clea r: I f you w ant yo ur co mpany to

grow, ramp up the power of design. With the emergence of India and China as

low-cost, high-volume producers of services and products for the global market-

place, companies in North America, Europe, and Japan must innovate to grow.

In the Cisco 2005 Innovation Study, which polled 635 U.S. in formation tech -

nology and business leaders, 53 percent said innovation is the critical success

factor for competitiveness. Added Cisco president and CEO John Chambers:

The economic benef‌its of innovat ion, which include greater productivity

and leadership in new markets, are what wil l ensure that global economies

maintain their competitive edge. As countries, companies and even indi -

viduals make choices about where to invest, these results underscore t he

role innovation has in driving global compet itiveness at all levels within an

economy, from the government to education to private business.

In Canada, recent research by think tanks and business schools high-

lights innovation as the pri me driver of growth a nd productivity and urges

government and business to work together to make this happen. “Realizing

Canada’s Prosperity Potential,” a report prepared by the University of Toron-

to’s Institute for Competitiveness & Prosperity and presented at the January

* Many of the resources cited i n this chapter are now avail able exclusively on the Deloitte

internal knowle dge management system. For more infor mation, please contact the editor at

jhorvath@deloit te.ca.

884 maneesh mehta

2005 a nnual meeting of the World Economic Forum in Davos, included

the following recommendation: “Governments need to ensure regulatory

and innovation policies st rengthen specialized support and competitive

pressure.” One of these supports is a higher investment in education. The

report reveals that 31 percent of Canadian ma nagers possess a university

degree versus 50 percent of U.S. managers: “If t he link between educa-

tion and innovation can be d rawn, it is quite apparent why we are less pro -

ductive and prosperous in Canada. The more educated mana gers are, the

more likely they are to think innovatively and strategically and to operate

more effectively.” As well, says Lawrence O’Keeffe, the Conference Board of

Canada’s director of human resources management research, focusing on

the key results of the Conference Board’s 2005 report “Moving Beyond the

Plateau — Time to Leverage Lear ning Investment”: “ Training is a critical

component of innovation, which leads to higher levels of productivity. Or-

ganizations need to align training investments with their overall lear ning

strategy, so the dollars spent contribute directly to meeting business goals.”

(Canada fell from twelfth in 2002 to twentiet h in 2004 in the Institute for

Management Development’s global competitiveness survey.)

With t he need so clear, the pace of innovation is accelerating at wa rp

speed. So much so that several major corporations have even outsourced

design to Asian countries: for example, Wipro, in India, has become the

world’s largest contract R&D house for telecom, auto, and electronics;

Compal, in Taiwan, develops and produces notebooks and cell phones for

Motorola, Toshiba, Sony Er icsson, and others. What is becoming increas-

ingly clear is that organizations of every size, sector and industry must in-

novate to successfully compete and grow in what is being variously called

today’s “creativity economy,” “innovation economy,” and even “empathy

economy” (since understanding consumer emotion is key to good design).

But what does innovation mean in a business context?

According to a 2004 Boston Consultin g Group (BCG) survey of 500

senior e xecutives in forty-seven countries and from all major industries,

most respondents def‌ined innovation in terms of creating new products,

services, or processes — or, as one CEO put it, “turning ideas into prof‌its.”

And i n a 2005 survey of 707 business managers by Fast Company, Egon

Zehnder International and IMD, the Switzerland-based business school,

the overwhelming majority rated desig n as a pivotal strategic and competi-

tive driver: some 90 percent of respondents said top executives must cham-

pion design; 89 percent saw design as v ital to connecting wit h customers;

and 84 percent rated design as key to solving problems.

In fact, D-schools are outpacing B-schools in creating innovative masters

of design — leaders and professionals who can close the in novation gap for

organizations of all kinds in a variety of dimensions. For example, the Insti-

Growth by Des ign 885

tute of Design at the Illinois Institute of Technology teaches design thinking

and strategy, and recently started up a nine-month Master of Design Meth-

ods (MDM) degree that focu ses on design methodologies for user research

and observation, prototyping new services and products, creating innovation

systems, and connecting corporate strategy with user innovation. Stanford

University has created a new D -school to help managers learn the dynam ics

of desig n. Imagi nation is t he newest mus t-have compete ncy for seni or execu-

tives. As GE CEO Jeff Immelt recently said: “Creativ ity and imagination ap-

plied in a business context is i nnovation … We’re measuring GE’s top leaders

on how imaginative t hey are. Imaginative leaders are the ones who have the

coura ge to f‌ind ne w ideas, lead teams to di scover bet ter ideas, and lead pe ople

to take more educated risks.” Some companies, ahead of the innovation curve,

have even added a new member to the C-Suite: the Chief Creativity Off‌icer.

Both Samsun g and P&G have one. And J. Mays at Ford recently added this

title to his other one of group vice-president of design.

A 2005 Boston Consulting Group poll of 940 senior executives in sixty-

eight countries identif‌ied the twenty most innovative global companies. A

quick scan outlines the different ways companies can be innovative. Widely

recognized in the top spot is Apple Computer for combining an outstand-

ing consumer experience with superb product design. 3M comes second

because of its strong culture of creativ ity wit h formal incentives to innov-

ate. GE makes the l ist for its management pract ices that put it ahead of its

competition. How you innovate can be disruptive (if you create something

radically new to the company and its market) or sustaining (if you make an

incremental cha nge to an existing line). The following table outlines how

that works in three dimensions: product, process, and strategy.

Table 1: Def‌ining Innovation

Innovation Product Process Strategy

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1) The Growth Challenge

What ever app roach y ou cho ose to t ake, s ustai ned top -lin e revenu e grow th is a

tough proposition. Several studies in the past f‌ive years demonstrate that ap-